Tuesday, August 9, 2011

Daily Technical Analysis - August 9, 2011

The US stock market fell yesterday as everybody expected. The current mood in the markets reminds the sad atmosphere from 2008 as the fear gauge jumped dozens of percents in the last few days. As we mentioned in the Weekly analysis, looking for supports in the indices’ charts is pointless in this stage, and the markets will calm down when the short-holders start realizing some profits. This hysteria is obviously influencing the Forex market, and it is hard to spot clear points for entering. Therefore, it is necessary to deeply analyze each trade-idea you come up with.

Investors will hope to find some optimism in Bernanke’s statement after the interest announcement later this evening, which is expected to remain unchanged.

GBP/USD

The strength of the pound was blocked by the resistance we analyzed yesterday, at 1.647. The crashing of Wall Street is supporting the US dollar, and therefore the GBP is weakening. However, the recent bullish momentum in the pound might show up again if the British currency breaks-through the resistance at 1.647. As long as the support at 1.62 remains, the GBP will have an upside.

USD/JPY

Sunbird’s chief analyst mentioned many times during the recent period that the Japanese intervention will not last and the Yen will get stronger as long as the market wants that. The Japanese currency completed the reversal pattern after sliding below Monday’s bottom. It is supported by investors who see this instrument as a stable investment these days. There is no clear support in the daily chart for going in under it, so it is possible to look for potential trades in the intra-day charts. The next significant support is at 77.0.

EUR/JPY

The EUR is struggling with the momentum of USD, and it looks stronger than you would expect for this situation. However, the strengthening of the Yen took the EUR/JPY down and created a bearish Engulfing candlestick, which indicated that the sellers took over again. The current support is at 109.5, and though a correction-up might occur in this point, the general trend is down and the price can slide to 106.5.